The number of renters who are willing to spend at least $5,000 monthly for a luxury residence is on the decline in South Florida, according to a new report from CondoVultures.com.
Luxury leasing activity decreased by 20 percent in the first five months of 2012 on a year-over-year basis in the tri-county region of Miami-Dade, Broward, and Palm Beach compared to the same January through May period in 2011, according to an analysis by the Rental Division of the licensed Florida brokerage CVR Realty™
Tenants leased an average of fewer than than 145 luxury residential properties monthly in the first five months of 2012, compared to about 180 luxury properties monthly during the same period in 2011, according to the analysis based on Florida Realtors association data.
A year earlier in 2010, tenants leased an average of more than 140 luxury properties per month between January and May.
At the 2012 leasing pace, South Florida’s nearly 1,750 luxury residential properties available for rent at a price starting at $5,000 monthly as of June 11 would require more than a year to be absorbed, according to the report.
Many of the most expensive luxury rentals are located in Miami Beach, where several island estates are seeking as much as $150,000 monthly.
A factor contributing to the decreased leasing activity in 2012 is the rising rental rates - even in the pricey luxury market - in South Florida, industry watchers said.
Tenants who leased South Florida luxury properties in the first five months of 2012 paid a median rental rate of $2.33 per square foot per month compared to $1.83 per square foot in the same period in 2011, according to the report.
In the previous year of 2010, tenants of luxury properties paid a median rental rate of $1.90 per square foot monthly in the tri-county South Florida region, according to the report.
South Florida's luxury rental rates are benefiting from a number of factors, including the region's high number of foreclosures, the lack of financing available for would-be buyers, and a growing anti-ownership sentiment by primary users, given dramatic property value declines during the last five years.
Going forward, it is unclear what impact thousands of newly proposed rental projects would have on lease rates, industry watchers said.
The completed leases do not reflect any deals that that may have been transacted without being marketed on the Multiple Listing Service.
It is important to note there are various stages to a residential real estate transaction in South Florida.
A transaction begins when a property is made available for sale and ends when a title is conveyed from one party to another party as a result of the recording of a deed with the local government.
As part of the process, a property typically goes under contract and into a due diligence phase by which a deal can be canceled.
The CondoVultures.com new condo sales report is based on completed transactions where a deed is recorded and taxes paid as a result of the sale.
Condo Vultures® LLC is a real estate consultancy and marketing company based in the 225 Midtown Building at 225 NE 34th St., Suite 209B, Downtown Miami, Florida, 33137. Condo Vultures® LLC can be reached at 800-750-0517 begin_of_the_skype_highlighting 800-750-0517 end_of_the_skype_highlighting.
